The Impact of Corporate Welfare Policy on Firm-Level Productivity: Evidence from Unemployment Insurance

Masako Darrough (), Heedong Kim () and Emanuel Zur ()
Additional contact information
Masako Darrough: Baruch College
Heedong Kim: University of Maryland
Emanuel Zur: University of Maryland

Journal of Business Ethics, 2019, vol. 159, issue 3, No 12, 795-815

Abstract: Abstract We study how changes in unemployment risk affect firms’ productivity and whether firm-initiated policies can mitigate the moral hazard problem created by increases in unemployment insurance benefits (UIBs) that might decrease workers’ incentives to work hard. We focus on state-specific changes in UIB levels as a quasi-natural experiment. While a large body of research has examined UIBs, including their effect on unemployed workers, few studies investigate whether UIBs have any impact on a firm’s overall productivity. Using data on firm-level total factor productivity and state-level UIBs, we find a negative association between productivity and UIBs. We also find that the negative association is weaker for firms with higher employee-welfare indices than for firms with lower indices, suggesting that the adverse effect of higher UIBs on productivity is mitigated by policies that benefit workers’ welfare. More specifically, we find that among policies that are under the umbrella of corporate social responsibility, a subset of employee-welfare policies (e.g., work/life benefits) are more effective in managing moral hazard problems than other policies.

Keywords: Corporate social responsibility; Employee-welfare policies; Unemployment insurance benefits; Productivity (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s10551-018-3817-2 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jbuset:v:159:y:2019:i:3:d:10.1007_s10551-018-3817-2

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10551/PS2

DOI: 10.1007/s10551-018-3817-2

Access Statistics for this article

Journal of Business Ethics is currently edited by Michelle Greenwood and R. Edward Freeman

More articles in Journal of Business Ethics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().